Personal Bankruptcy Vs. Business Bankruptcy In Alabama

Filing for bankruptcy in Alabama is one of the last resorts considered by people or businesses who are knee-deep in debts in this state. Like in other states, bankruptcy is also a common occurrence in Alabama. But it is a must to study all the options available before considering this route because even though this will alleviate your financial condition, it can also have adverse effects on your personal life, financial standing, and career.

Personal Bankruptcy in Alabama

Filing for personal bankruptcy in Alabama has changed significantly after the enactment of the new Bankruptcy Code of Alabama in 2005. Since then, individual debtors who seek to file for bankruptcy in Alabama were required to accomplish the Official Bankruptcy Form B22A or B22C. B22A is for chapter 7 while B22C is for chapter 13. In these forms, the debtor is asked to put in income and expenditure information. These forms determine if a person is qualified to undergo either of the two bankruptcy types.

Chapter 7 allows debtors to have a “fresh start.” All the debts will be eradicated in exchange for the liquidation of one’s nonexempt properties. The proceeds of the sale will be distributed among the creditors. In Chapter 13, the debtor is given a chance to restructure debts through a 3 to 5 year period of repayment plan. Under the repayment plan, the outstanding balance of the debts is to be reduced or extended. No liquidation of assets occurs in filing for this particular type of bankruptcy.

Business Bankruptcy in Alabama

For businesses suffering from an overload of unmanageable debts, chapter 11 or chapter 7 bankruptcy can be filed. In chapter 11, a debt reorganization plan is in order to provide the business with financial assistance to recover from the debts. The Alabama Bankruptcy Court can allow for the extension or reduction of some debt payments. If a company or business has filed for chapter 11, trade is still permitted but the bankruptcy will have some adverse effects on its image, which can drive away potential investors. Under chapter 7, on the other hand, the debtor will be required to sell assets of the company or business to pay for the creditors.

Seek Legal Help

Consulting a bankruptcy lawyer is one of the first things you need to do if you are considering this option. It is imperative that you take a good look at the other available alternatives to debt relief including debt consolidation, debt management plans, and debt settlement before you opt for this last resort.

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